One way for a business entity or organization to grow is by buying and selling other entities. For example, a parent organization may open a chain of stores and direct consumers to those stores. By doing so, the parent organization may gain a share of the profit from each sale made by the stores.
A franchise can be seen as a form of chain store. Wal-Mart is an example of a chain store, while McDonald's is an example of a franchise. In a franchise or franchised dealership, each party to the franchise (a franchisor and a franchisee) has certain obligations and share revenue from sales. Such a franchise usually lasts for a fixed amount of time and serves a specific territory or area surrounding its location. The franchisor is most involved in securing protection for their trademark, controlling the business concept and securing their know-how, but not necessarily the locations of their franchised outlets (establishments owned by franchisees). A buyer of a franchise (i.e., a potential franchisee) generally would have some say when determining the location of her franchise, although she may choose to work with the franchisor to determine a location for her franchise in a crowded market.
From the perspective of the franchisor (a parent organization), there can be many considerations in choosing a potential franchisee. The selection process is usually a complex and complicated one. Consequently, there is always room for improvement.